When the most oil-rich nation in Africa and the continent’s largest economy, Nigeria, nearly runs out of jet fuel, leaving thousands of air passengers stranded – as happened recently – it makes you sit up and think about buying business travel to the region
Ebola, security and terrorism fears, as well as social unrest and visa issues have all put a strain on executive travel to the continent. Yet as a business travel destination it’s a tantalising prize: six of the world’s ten fastest-growing economies are now in Africa, and there’s also a burgeoning middle class, ready to spend.
Outside Europe, Johannesburg in South Africa is already the fourth most-visited city for British executives, according to booking figures compiled by American Express Global Business Travel for 2014.
Air traffic for the region is also expected to grow by more than 6 per cent this coming decade, according to the Boston Consulting Group, following in the footsteps of Asia, now an economic powerhouse.
Travellers are increasingly realising that they’re not just getting on a plane to the United States of Africa. Nowhere else in the world would see 54 countries and over one billion people, speaking over 1,000 languages, lumped together in the way that this continent has been. Yet attitudes are changing and there is a growing understanding of the continent’s intricacies. The gap between perception and reality is also narrowing.
“Managers need to get on a plane and visit the region, to see what their travellers are seeing and experiencing,” says Chris Pouney, partner at strategic consulting firm Nina & Pinta. “To manage trips effectively to, from or within the African region, a travel manager has to be at the absolute top of their game. There are no hiding places.”
There is also no doubt that a productive, hassle-free trip can be crucial to a company’s expansion in this booming region. “With many of the world’s traditionally strong economies stalling, many organisations are looking to Africa to drive growth over the next decade,” says Pouney. “The rewards for managing travel here are great; but so, too, are the risks of getting it wrong.”
And there can be some very simple, yet disturbing pitfalls for the not-so-savvy travel manager. “In Lagos, Nigeria, if you’re connecting from a domestic flight to an international one, a change of terminal is generally needed – and this involves a journey of almost 6km with no real shuttle service operating between the two,” says Richard Saunders, senior director at Carlson Wagonlit Travel.
There are also still a few African countries that do not even have an embassy in the UK, such as Chad, Togo, the Central African Republic and Mali. “Visa applications have to be sent to the relevant embassy in Brussels or Paris, and allowing for this can help avoid stressful situations,” says Dan Hall, senior visa consultant at Diversity Travel.
Understanding the market
However, there is also still a limited understanding of many African markets here in the UK. Combine this with a lack of information from the frontline and you have some real problems: organising ground transportation in Luanda is not the same as in Lisbon, and getting someone on to an offshore rig in Norway is a world away from a similar journey in Namibia.
“Corporations and travel management companies [TMCs] often make assumptions that what works in the UK and Europe will also be possible in Africa,” says Ciarán Kelly, general manager for FCM Travel Solutions’ Africa and Middle East networks, “especially in terms of payment solutions and internet availability.”
In many cases, travel buying isn’t first-hand and nor is travel knowledge; that’s because a number of the big TMCs rely on local agencies, which are joint ventures or franchise affiliates, to manage bookings.
“This often results in frustrating inconsistencies with processes, data capture, reporting and, most importantly, service levels,” says Sonja Hamman, director of strategic client management at Wings Travel Management.
According to a recent Severnside Consulting/ABTA report surveying 700 travel stakeholders, Understanding Business Travel in Sub-Saharan Africa, only 47 per cent of buyers could generate automated traveller-tracking reports, while 58 per cent aren’t getting data from their African offices. Even when they do receive it, 32 per cent believe the data is of poor quality.
Consolidating TMC services is also a goal for many buyers, yet this is a challenge because of inconsistent levels of service delivery across African markets, and differing offerings in each country. “There is also a lack of effective account management in these markets,” says Hamman. “We’ve chatted with buyers who have not seen an account manager in almost a year. Where is the value in that partnership?”
It doesn’t help that some airlines cannot be booked via the global distribution systems (GDSs) in Africa, and some credit card companies are not accepted by the GDSs either. Many global travel managers are surprised to learn that manual payment processes exist in many markets, with suppliers often having to wait well beyond their agreed payment terms to be paid.
Additionally, there are many low-cost carriers operating in Africa that need to be booked via local travel agents or company travel co-ordinators in-country. These bookings are, therefore, being missed from any travel tracker reporting.
“However, travel buyers and managers should expect reporting, even if some of it is manually extracted, resulting in delays and some quality issues,” says Pouney.
“We need programme managers who are accountable both locally and globally. The biggest success stories in Africa are where buyers partner with TMCs to develop a service operation, which merges the best in local delivery, with globally recognised standards in service and process.”
Yet, in some countries and economic sectors, travel buying has to be local. “For example, Angolan regulations on global energy companies state that they have to keep a certain amount of currency in country,” explains Adam Knights, managing director UK at ATPI. “So, these companies want to pay for services they use, relating to their local business, with cash they earn in that country.”
State of flux
The African travel market is also in a state of flux. Back in June last year, for instance, OAG had some 93 scheduled airlines sending them data for African flights. Today, it has 88 airlines – five less, in a region that is supposed to be one of the world’s fastest growing. In 1980, there were 26 African-owned carriers flying internationally; today there are only nine.
The lack of route capacity and the absence of a cohesive African airline network are the two main stumbling blocks to growth. Air fares across Africa are also around one third higher than equivalent journeys in Europe, according to an African Development Bank report. In November 2014, all regions except Africa recorded year-on-year increases in air traffic demand, according to the International Air Transport Association (IATA). Some put this down to the Ebola outbreak in West Africa.
Room for improvement
When it comes to booking a hotel room, you won’t be inundated with choice from global hotel chains, dotted across Africa’s capitals. What you will find is many pricey rooms and a lack of hotel grading. The fact is, branded international corporations have found the continent an extremely complicated and fragmented market to work in, with dozens of different languages and legal systems to contend with. Add to this the fact that many locations present few opportunities outside of the capital city.
“This is now changing,” says Julian Munsey, marketing manager at Hillgate Travel. “Last year Marriott purchased Protea Hotels – a pan-African group. Now many of the global hotel chains are planning openings across the continent.”
Radisson Blu now has properties in Lome (Togo) and Kenyan capital Nairobi, and also plans further openings across Africa, including Chad.
Yet in many ways the continent has the potential to leapfrog other ‘legacy’ travel markets in areas such as mobile telephony. “Take Kenya for example,” says Munsey. “Mobile payment is extremely popular, while here in the UK we are still working on an invoice or credit card account basis.”
In some East African markets, there are already moves towards a mobile-first strategy when it comes to e-commerce; already, business is often conducted in a ‘cellular-only’ fashion. Some markets are global frontrunners in mobile internet usage, despite take-up of technology within travel programmes being poor. South Africa is really the only market where online booking for domestic travel is prevalent.
“If I was a travel manager right now looking to trial new mobile booking and expense platforms, I would be looking hard at some of my African operations,” says Pouney.
Africa is always going to be a vast and complicated market, with a land-mass greater than China, the US, India, Japan and most of Europe combined. However, when travel buyers learn to accept this reality, and take account of the real size of this last untapped continent, they can then start to really get down to business.
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